OPEC has said expectations of firm demand based on stronger economic growth forecasts may sustain higher oil prices in 2018 despite the firming of the U.S dollar, which always have inversely correlation to prices.
In its February monthly oil report, the cartel said the International Monetary Fund (IMF) raising its 2018 forecast for global GDP growth by 0.2 percentage points to 3.9 percent in its latest World Economic Outlook, released on 22 January would help sustain demand and prices.
It noted that the increase in crude prices in the past months was also driven, in part, by a weaker dollar, saying that before recovering toward the end of the month, the US dollar index fell to its lowest point since December 2014.
However, the dollar has strengthened with equities markets sliding more than 11 percent from this year’s peak in late January. Because of the inverse correlation, by Friday, February 9, oil prices deteriorated with NYMEX WTI and ICE Brent crude futures sliding nearly 10 percent over the first 6 trading sessions in February to their lowest values since mid-December.
Most recently, oil futures posted a sixth straight day of losses, pressured by the turmoil in global equity markets sparked by inflation fears and stronger-than-expected US supply figures.
OPEC, however, reposes confidence in the IMF report of strong growth which it sees would sustain higher oil prices in the year.